In a caricatured simplified world, there are three broad sources
of finance: equity, debt, and borrowing. In each case, in terms of
origin, funds can come from domestic and foreign sources.
Interestingly, when one looks at Balance of Payments (BoP)
representation of a country, it majorly comprises of the following
two components: investments and borrowing.
External Commercial Borrowings
("ECBs") have emerged as an important
item of the capital account in India's BoP and is a key channel
to facilitate access to foreign capital by Indian corporates. ECBs
are commercial loans in the form of bank loans, buyers' credit,
suppliers' credit or securitized instruments availed from
non-resident lenders, and can be obtained through two routes, the
automatic route and approval route. ECB regulations in India are
monitored by the Reserve Bank of India (RBI) in consultation with
the Ministry of Finance, Government of India, and are guided by the
broad guidelines that govern the
